A lot of paper. And they've added another 9.1m shares to the pile since the end of the July quarter (out this afternoon on SEDAR). And over $200k a month in G&A, are these guys serious? IO.v is just another example of the pathetic jokes that Canada passes off as decent mining companies.

And yes, this is the same company that Daniel Ameduri pumped last year.

9/28/17

...comes from A. Person, who must remain anonymous but is fairly described as an investment professional. Not only do I agree 100% with this mail, it's also the type of eloquence I would like to achieve when I grow up. The mail has been edited very slightly to smooth grammar, its meaning has not changed a jot.

We
don’t have the best regard for Paulson. I’m not sure if many do these
days. I don’t think they have a clue what they’re
doing in mining, equally I don’t really think that was their main
intention. My understanding is that Paulson wanted to make a
leveraged bet on U.S. inflation, so he put a chunk of money into big, out-the-money monster assets. In fairness Buffett
thought the same inflation response would happen, but apparently he
knew better than to invest in gold mining companies.

Maybe
in the process Paulson realised the hard way that the industry is a big
dirty casino scam whose primary function is
to take other people’s risk capital and find ways to stuff it into
their pockets with their left hand while waving their “hot table” flag
with their right. Everybody's playing the same game, the buy side, the
sell side, the companies, it’s one of the few
industries where all those parties are aligned. They’re all quietly
jerking each other off under the table so nobody has any incentive to
stand up. I find it hilarious that Paulson found out the
hard way that he had stumbled into the centre of
an orgy, but it also appears to have made him angry. And that’s where
things change, because now he’s motivated to rip off the tablecloth and God bless him, because I hate the mining industry circlejerk. Anybody with a brand name and a large pool of active capital who wants to throw their weight behind that cause has my endless
blessing and support.

He’ll
soon meet the other side of the mining industry though, It’s a clubby, defensive bunch who all feel very special
and important, even though most of them wound up with their degrees
because they didn’t have the grades to get into the more prestigious
science/engineering programs, so people coming in and pointing out the
obvious reflects badly on them as a whole. So
they’ll scream in defiance that the world is flat, or say the
world may not be flat, but you will never be the one to tell us so. Nobody likes it when somebody tries to raise the bar, morally,
intellectually, structurally, whatever. Right
now everybody gets paid to jerk off, imagine if they actually had to earn
it through an accountable process!

Yesterday in this post, IKN professed its brand new mancrushfor John Paulson and also featured the link to the presentation made by Michael Marcelo Kim of Paulson & Co at the Denver Gold Show. IKN received a lot of feedback on this post (seriously, the most for a long time, it seems to have hit a nerve) and though most of that feedback was was either wholly or majority positive, a couple of issues came up and were repeated. So this update post exists because, in the humble and considered view of your humble author, those criticizing are fucktards.

There were two lines of criticism:

1) I was told Michael Kim is a dumbass. The best of the crit mails on this angle (and there were several, I don't know the dude but he obviously rubs a lot of people up the wrong way) came from a friend of mine, who said among other things:

Kim is NOT the right guy to lead the charge, he’s a pompous asshole. (He) tries to show you constantly that he’s “the smartest guy
in the room”, bombarding people with the most inane questions. It's OK to ask tough questions in a meeting, but he goes overboard and is an asshole about it when you
can’t answer “what’s your ratio of capital expenses to M&I gold
ounces as a function of lubricants and other oil price based
consumables, when adjusted for CPI, when you look at the last 3 benches
of mine production?” type questions.

There were more, but that was the most eloquent of the mails received about Señor Kim (I needed to edit a bit too) of the same ilk. One problem I have with this line of criticism is obvious, it's Ad-Hom and doesn't address the content of the presentation (which, I insist, was very good); Who cares about the character if he speaks truth to power? Another problem is that I too am a pompous asshole, so lay off of us okay dude? The final problem is that Kim may think he's the smartest guy in the room but he's obviously not; the person who hires Kim and lets him continue with his genius fantasy is clearly smarter than him. And that's important, because without Paulson and his financial heft Michael Marcelo Kim would be another small voice lost in the storm; exactly like IKN in fact. People only pay attention to Kim's presentation because of Paulson so don't shift focus here, this is Paulson's pony. That's why the name "John Paulson" is in the title line of this post and yesterday's, the boss is the boss.

2) Paulson/Kim profess (in the presentation) their investment in International Tower Hill (ITH.to) as evidence they're doing it the right way. At least half a dozen of you picked up on this (via the last slide) and it's difficult to lay too much blame, anyone deeply invested into that total waste of time is clearly a dumbass at some level. However in mitigation a) nobody's perfect and b) I insist, even though these people aren't going to win any Nobel prizes they have serious market gravitas and cash to back up the main thrust of their argument. And that thrust, frankly, is impeccable:

Yes, precious metals mining companies are woefully run.

Yes, their CEOs, officers and board members get way waaay overpaid for their mediocrity.

Yes, the destruction of capital under their collective watch is nothing short of scandalous.

Yes, it's long past time that we the shareholders got organized, got active on their asses and made the whole sector more accountable. Hopefully by firing a few of their worthless carcasses.

If it takes an imperfect but famous investor around which we rally in order to get a bit of activism done, then I will happily take the deal. Therefore, detractors of the Paulson/Kim presentation, you are fucktards you cannot see the forest for the trees. End of rant.

"...what people who moved the stock up 38% or 40% seem to fail to gather is
that the Escobal mine isn't opening any time soon, that the permit is
still under legal review, that TAHO has to get community approval before
it's out of the woods and, most importantly, the people who they need
to get on side are the same people that are blocking the access to the
mine. As for the NR itself, that was one veeeery carefully worded piece
of legalese. Strange how the market will continue to believe bullshit
liars. I mean seriously, what are you betting on here, rule of law in
Guatemala?"

VANCOUVER, British Columbia - September 26, 2017 - Tahoe Resources Inc.
("Tahoe" or the "Company") (TSX: THO, NYSE: TAHO) announced today that
the Guatemalan Supreme Court issued a ruling in response to the
Company's request for clarification regarding the specific geographical
areas to be included in the Ministry of Energy and Mines ("MEM")
consultation process under ILO Convention 169. The Court clarified its
decision to limit consultation to the Xinca communities in the four
municipalities in the region of the Escobal mine including: Casillas,
Nueva Santa Rosa, Mataquescuintla and San Rafael Las Flores.

In
addition, the Supreme Court declined to review the Company's request to
order MEM to issue the annual renewal of Escobal's export credential.
The Company is evaluating its legal and administrative options. The
Constitutional Court is expected to rule on all appeals of the Supreme
Court's decision on the definitive amparo by the end of the year.

Tahoe
continues to focus on reaching a peaceful and expeditious conclusion to
the roadblock at Casillas, which is approximately 16 kilometers away
from the Escobal Mine in San Rafael Las Flores. The Company is making
progress with engaging stakeholders at the Casillas roadblock.

Things you need to know:

1) They may be trying to spin this as "limited", but TAHO must be severely worried about the Guatemala Supreme Court (CSJ) decision to admit Casillas, Nueva Santa Rosa and Mataquescuintla into the region covered by the prior consultation and social licence process. Casillas is where the current roadblock is located, Mataquescuintla is the municipality that voted 96% against mining projects in a local referendum in 2012, a result that was finally recognized in 2015. Nueva Santa Rosa is the place where four mining projects were chased out of town. Want it in simple terms? They may have a 50/50 pro/contra in San Rafael, but with these districts included TAHO doesn't have a hope in hell of getting a positive result. Bye bye permit.

3) On that subject, though TAHO claims in its NR tonight that it's "making progress", today the protesters stopped trucks from going through to supply the mine and smashed their windscreens. TAHO's local manager statedthat there were two locations for road blocks and the trucks had to turn back, else have their vehicles set on fire. Yup, everything looks calm.

(Bloomberg) -- Billionaire John Paulson is building a coalition of major investors in some of the world’s top gold producers to curb years of “value destruction” and excessive executive compensation in the industry.

“The days of CEOs getting rich while shareholders lose has got to end,” Paulson said Tuesday in an emailed statement ahead of a presentation by Paulson & Co. at the Denver Gold Forum. “Management must be accountable.”

The group, to be named the Shareholder’s Gold Council, aims to unify and amplify the voices of institutional investors on matters including board appointments, pay plans and merger activity, said Marcelo Kim, a partner at the hedge fund firm who oversees investments in natural resources.

“Returns have been dreadful,” Kim said in a phone interview. “If we get enough investors on board, these companies won’t have any other choice but to listen to us.”

Shares Slump

Shares of 15 gold miners tracked by Bloomberg Intelligence, led by Yamana Gold Inc. and Kinross Gold Corp., have slumped 59 percent since the end of 2010, compared with a slide of 8.5 percent for the precious metal. Several producers poured money into new mines earlier this decade, just as gold prices began to fall, leaving them larded with debt.

Companies in the industry have incurred $85 billion of write-offs since 2010, much of it attributable to ill-advised mergers, while still richly rewarding chief executive officers, according to Paulson & Co.’s presentation. A lack of engagement between boards and investors, and the absence of activists, allowed the companies to do business this way, it said.

The net debt of big mining companies tracked by Bloomberg Intelligence surged almost sevenfold over four years to a record $33.2 billion in 2014, fueled by capital spending.

Paulson & Co. has been in talks with Tocqueville Asset Management LP about its plans for the Shareholder’s Gold Council, Kim said. Vanguard Group Inc., BlackRock Inc., State Street Corp. and Van Eck Associates Corp. are among other large investors in several of the mining companies mentioned in the presentation.

The industry is ripe for this kind of oversight because it’s relatively small and most of the outstanding shares are held by a limited number of investors, Kim said. The group will function much like proxy adviser Institutional Shareholder Services Inc., making recommendations on voting matters such as compensation and the appointment of board members.

Paulson, 61, started a fund that invested in mining companies and bullion-related derivatives in January 2010 with about $250 million of his own money, betting that prices would rise amid unprecedented monetary stimulus. The fund jumped 35 percent in its first year, but then posted losses in some subsequent years after gold peaked in 2011.

UPDATE: Three people have mailed this afternoon about the Paulson & Co presentation given at Denver by Michael Kim. One called it an "Excellent ppt", another "Phenomenal presentation", the third "You have to link this presentation!". So here it is, the link to the PDF version of Kim's PowerPoint today. Yes it's very good, today's must-read on mining.

This was one of the sections in The IKN Weekly IKN436, sent to subscribers Sunday evening. Since then (one and a half trading days ago) DNA has lost another 3.4%, which makes the chart a a couple of the lines dated by the market 48 hours. But the rest is fine.

A word or three are needed on the
short post I stuck on the blog Monday (23) regarding the news out of Dalradian
Resources (DNA.to) that morning (24) on its “ore sorting” study that purported
to be a positive development for its Curraghinalt project in Northern Ireland.
Although not in the usual geographical zone for The IKN weekly we have covered
and this stock and traded it before (for a reasonable profit, way back when) so
it’s one I keep on the radar.Here’s
what I wrote (it was a very short post):

...after its NR this morning. Maybe the market doesn't get how negative
this ore sorting news is, what with the company dressing it up to make it look
like a positive.

I got feedback from several people,
including mining engineers and investment pros, who tended to say basically the
same thing (paraphrased); “But it IS a positive!”. However, as this five day
chart comparing DNA to the XAU index shows...

…as the week wore on the market
decided to side with me on this one, rather than my correspondents or DNA
management (and to be really pedantic, when that post went public DNA was
trading at $1.62, so from then to Friday’s close it lost 15c, or 9.3%).
Therefore this note today.

First let’s consider the headline,
“Ore Sorting Increases Grade of a Bulk
Sample by 55% at Dalradian's Curraghinalt Project”, which certainly looks
good splashy at the top of the document. Then we get to read how DNA can start
with mineral grade from 9.52 g/t gold, then, “Using x-ray and laser technology, plus additional screening prior to
processing, the amount of non-mineralized (waste) material that would be sent
to the mill in an operating mine was reduced by 35.8% and the grade increased
by 54.6% to 14.72 g/t Au with a gold recovery of 99.3%”, and that, “Similar results would be expected if
implemented into a mine scale situation.” Now that sounds nice, but when
you keep reading you find that the theory DNA is running with on this
technology means that, “Using the base
case feasibility cost estimate of US$27.8/tonne for milling, this could result
in savings of US$52 million against a revenue loss of approximately US$12.6
million (at 1,250 US$/oz) due to recovery being reduced by 0.7%.”

Ah but wait up, that’s on the DNA
Feasibility Study (FS) of a 10 year mine life, i.e. 40 quarters, and the opex
saving is nearly $40m. Wait, I can do that math! Then we need to consider that
DNA has 280.26m shares outstanding, so if we divide the quarterly cost saving
into that we’re talking about a difference of 0.35c per share per quarter…or
1.4c per share per year. And this company’s share price jumped 4c at the Monday
bell while the rest of the sector had a bad hair day? Does not compute. And we
haven’t even figured in the extra capex for the required machinery yet. So, two
brief paragraphs we’ve gone from a headline of 55% higher grade to less than a
third of a cent per share of extra earnings per quarter.

So far so mediocre, but all that
doesn’t even take into account the real negative. One highly experienced mining
engineer was quick to pick up on the news and his comment to me (I’ll leave out
the lines with the Anglo-Saxon vocab, he’s a mining guy after all) was, “Ore sorting is a very
desperate sign”. Agreed. Curraghinalt is a project that has had the spectre of
excess mine dilution hanging over it for as long as I can remember. What we got
from the company last week was an admission that “yes, this is a problem”
because the whole concept of ore sorting isn’t to turn robustly economic
grading ore into wonderstuff (the spin on the NR), but marginal grade into
economic grade. In so many words, the optics on this NR are poor, DNA is
flagging its major technical issue to the world and instead of coming up with
something that dramatically improves the theoretical economics, gives us
something that in per share terms is as close to a wash as you can get.

And by the way, why did this
company jump straight from doing a PEA on the project to a FS without producing
a pre-feasibility study, then straight after the FS is published start coming
up with adjustments? Isn’t the FS the document that sells the project to the
highest bidder? And don’t get me started on the Northern Ireland local community
and national Brexit risk to this project. At its current C$412m market cap,
this one is an easy pass.

...this morning, quite a well-known one in fact, that said (quote) "When you have a minute to chat I want to run something by you". I think fine and replied "Tell me". Just a couple of minutes later the phone rings and the representative of the short selling firm offers me a gig. What happens is that they would do the legwork on A.N. Other stock then send over the information, I would publish the info on the blog, presumably they are already short when they give me the juice, the stock goes down and as a result they would profit. The short selling firm would then pay me 20% of their proceeds for my time and effort. He also said that the firm in question already has this type of arrangement with other outlets, so I can only presume their business model works just fine. I told the person in question that I'd think about the offer. He can consider this post as my definitive reply and if he wants to push his luck, next time names will be named.

IKN has always been, is and will remain utterly independent. Sometimes right, sometimes wrong, but always true and never dishonest.

"...that's not even half the truth because drilling in a different area under a different permit emitted from a different office doesn't change a jot."

Well sure enough, they've done just that. Check out the NR from LIX right here and as a further clue, see how many times they love talking about SDLA and how few times they mention Arizaro.

Therefore, to return to the point made by IKN on Friday, when is LIX going to stop ignoring the Canadian market authorities' rules and provide continuous disclosure on material events at its projects? We would still like LIX to come clean about 1) the well blow-out and 2) the permit suspension.

Second Place: "A few extra thoughts on Lithium X (LIX.v)".
The follow-up to this week's most popular post (below) with background and the way in which people's bias confirmation suffers when faced with facts that contradict their beliefs. I get snotty mails, I don't care.

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